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The 


Service  Bulletin 

of  the 
Bureau  of  Personnel  Research 


H.  G.  KENAGY.  Editor 


NOVEMBER,  1922 


No,  3 


The  Bureau 

exists 

to  serve 

business 

organizations 

in  the 

SELECTION 

TRAINING 

and 

SUPERVISION 

of 
PERSONNEL 


In  this  Issue: 

TURNOVER  IN 
SALES  ORGANIZATIONS 

BY 
WILLIAM  E.  LANGE 


The  Division  of  Cooperative  Research 
Carnegie  Institute  of  Technology,  Pittsburgh,  Pa. 


THE  SERVICE  BULLETIN 


The  Service  Bulletin  is  the  medium  through  which  the  Bureau  of 
Personnel  Research  publishes  the  results  of  its  scientific  research  in  the 
various  fields  of  personnel.  Each  issue  of  the  bulletin  discusses  some 
problem  of  general  interest,  outlines  the  plan  of  research  which  is  being 
carried  through,  or  gives  the  results  which  have  been  secured. 

Copies  are  furnished  free  to  all  companies  which  are  associated 
with  the  Bureau  in  its  work. 

The  following  titles  of  bulletins  indicate  the  general  lines  of  re- 
search and  service  with  which  the  Bulletin  concerns  itself: 

PROBLEMS  OF  SALES  ORGANIZATION. 
MANAGEMENT  OF  A  BRANCH  SALES  AGENCY. 
BASIC  EXPERIMENTS  IN  SCIENTIFIC  SELECTION. 
ANALYZING  THE  SALESMAN'S  JOB. 
PREDICTING  THE  CAREERS  OF  CLERICAL  EMPLOYES. 
TURNOVER  IN  SALES  ORGANIZATIONS. 
CHARACTERISTICS  OF  SUCCESSFUL  SALESMEN. 
TENDENCIES  IN  PERSONNEL  PRACTICE. 


The  April  issue  of  the  Bulletin  will  contain  the  results  of  time- 
studies  of  specialty  salesmen  in  four  different  selling  lines. 


TURNOTCR   HI  THE   SAIES  ORGANIZATION 


A  Study  of  Actual  Turnover  Oonditions  in 

a  Large  ITumber  of  Matlonal  Sales 

Organizations  V/ith  a  Discussion 

of  Causes  and  Remedies 


By 

William  B.  Lange 
Research  Assistant 


The  Bureau  of  personnel  Research 
Carnegie  Institute  of  Technology 

November,  1922. 
All  Rights  Reserved 


•   «..  .      .     • 


TURNOVER  IN  SALES  0BG/>3IZATI0HS 
TABLE  OF  CONTEOTS 


VAGS 


IS  TURNOVER  A  SEllOUS  IM.TTER  , 1 

Instances  of  High  Turnover  2 

Costs  of  High  Turnover  3 


TEE  FACTS  OF  TURNOVER 

How  Data  Were  Gathered 4 

Results  of  Questionnaire 5 

Reliability  of  Data 6 


AMLYSIS  OF  (SKER.iL  TDRSO^R  CONDITIONS      7 


COMPARISON  OF  TCRFOVER  AMOT^G  0EGA3:iZATI0NS  HAIDLING 

DIFFERENT  PRODJCTS 10 


COIviP .PRISON  OF  TORI«TOSR    IN  OFFICE  SPSCIALTF  OEGAMZATIONS 

WITH  TURNOVEE  IN  ALL  OTHER  BUSINESSES    12 


TBB  NEED  FOR  BETTER  TURNOVER  DATA    ^ y //{  /4  ■ 

Insufficiencies  of  Present  Data 14 

LIMITATIONS  ON  VALUE  OF  fURl^OVER  DATA 16 

WHAT  TURNOVER  RECORDS  SHOULD  BE  EEPT        18 

Record  Form  -  Txirnover  of  Seles  Force 
Analysis  of  Exits  -  Termination  Record 

VALUE  OF  PROPER  BECOIDS      18 


r>24'H3 


i*jewM(9».-j!-\*jr 


.'{finqikii-: 


TURI?OVER  IN  SALES  ORGANIZATIONS 

Is  Turnovor  A  Sorlous  Matter. 

Is   largo  tiirnovor  ^vithin  sslos  organizations  a   serious  ; 
matter?     Evidently  it  has  not  beon  so  rogardod  by  nany  companios, 
for  only  a    small  per  cont  of  nstionul  selos  orgfjnizations  havo 
given  the  matter  iriuch  consideration.     Convincing  proof  of  this  fact 
comes  readily  to  any  organization  or  concern  which  seoks  to  investi- 
gate conditions.     For  one   reason  or  another,  most  companies  have  not 
thought  it  if.'orth  xvhile  to  keep  turnover  data  .     Records  of  factory 
labor  turnover  hare  been  considered  essential  for  years;    salos  labor 
turnover  records  are   still  regarded  as  fads. 

Unintentionally,  manf/  sales  executives  hare  adopted  an 
indifferent  attitude   tov/ards  the  matter.     Salesmsn  turnovor  has 
beon  uniformly  high  during  the  past  few  years  and,  as  a  result,   the 
condition  has  come  to  be  accepted  as  a  natter  of  course.     A  turnover 
percentage  which,  considered  alone,  might  havo  caused  serious  concern, 
lost  much  of  its  alarming  quality  t/hen  considered   in  connection  with 
general  business  conditions  and  the   situation  in  other  companies. 

The  abnormal  conditions   since  1915  hav'B  led  other  sales 
executives  to  adopt  a  hopeless  attitude   -  to  believe  that  high 
turnover   is  unavoidable.     The  fact  that  causes  other  than  abnormal 
conditions  may.  be  operating  within  ji'.a*les  orgaEization  to  cause  high 
turnover  has  not  beon  considered.     Believing  that  abnormal  conditions 
alone  were  to  blame  and  that  those  conditions  could  not  bo  changed  by 
their  efforts,  these   sales  managers  have   simply  let  turnover  run  its 


-a- 


coursa.  <- 

Some  executives  have   not  evi^n  been  aivare   that  turnover  with- 
in their  sales  organizations  has  been  high.      In  the  prose  of  other 
matters,  they  have  noi^locted  to   secure   the  facts.     Altho\jgh  a"'are 
that  many  men  ■vrore   leaving  their  organizations  or  being  dropped, 
they  havo  not  appreciated  havr  serious  the  condition  wes,   since  they 
have  not  hsd  figures   showing  the  turnover   in  percentages. 
Instances  of  High  Turnover. 

A  turnover  of  100  per  cent  in  any  year   indicates  that  the 
nvimber  of  changes   in  personnel  equals  the  average  number  employed, 
and  yet  percentages  in  excess  of  this  figure  are  not  uncommon, 
especially  during  the    Inst  year  or  t-wo.     A  real  estate   sales  organi- 
zation, employing  a    sales  force  v/hich  at  times  has   numbered  one 
hundred  men,  had  an  average  annual  sales  turnover  for  the  period  from 
1915  to  1922  of  over  400  per  cent.     The  pcrcontago  of  turnover  for 
each  year   is  indicated  below. 


Year 

Average  Rumber  On 

Total  Number 

Total 

Per  Cent 

il 

les  Force 

Hired 

Exits 

Turnover 

1915 

60 

250 

200 

333 

1916 

80 

400 

320 

400 

1917 

40 

150 

110 

275 

1918 

35 

125 

90 

257 

1919 

100 

525 

425 

425 

1920 

60 

360 

300 

500 

1921 

20 

125 

105 

525 

1922 

(to 

Aug 

.) 

25 

100 

75 

515 

Conditions    .Ith  this  organization  are   exceptional  and  yet 
turnover  figures  in  excess  of  100  per  cent  in  other  sales  organi- 
zations can  be  cited.     A  notable  example  of  high  turnover  is  furnished 
by  an  organization  handling  an  office  specialty.     Since   1919  its 


».    f 


100 

42 

110 

126 

76 

101 

281 

181 

130 

308 

268 

394 

-3- 

percentage  of  turnover  has  not  fellen  helavi  100  per  cent.     In  fact, 
for  the    seven  months  of  1922 >   the  turnover  was  394  per  cent.     The 
range  of  txirnover  percentages  is   shown  below  % 


Year  Average  Kxjinber  On  Total'  Number  Total  For  eent 

Sales  Force  Hired  Exits  Turnover 

1919  38 

1920  75 

1921  139 

1922  (to  Aug.)  117 


This  organization  increased   its   sales  force  from  an  average 
of  38  in  1919  to  117  in  1922.     With  this  increasing  sales  force  it 
has  had  increasing  turnover.     During  the   seven  months  of  1922  alone, 
268   salesmen  left  the  company  and  308  wore  added.      Conditions   such 
as  this  are   surely  worthy  of   serious  analysis. 
Costs  of  High  Turnover 

The  seriousness  of  a  high  sales  turnoTrer   lies  in  its  costli- 
ness.    The   sales  manager  of  a   company  employing  over  600   salesmen 
states  that  each  salesman  represents  an  expenditure  on  the  part  of 
the  company  of  one  thousand  dollars  for  his  training  and  supervision- 
One  hundred  and  eighty  salesmen  left  this  company  during  the  first 
seven  months  of  1922,  v;hich  means  t\  cost  to  the  company  of  ^^180,000. 
This  is  a   considerable   s\an  of  monfeyl 

Most  companies  probably  do  not  have   sc  expensive  a  plan  of 
training  as  the  company  mentioned,    but  whatever  method  of  training 
is  used  involves   some  expense.     The  new  salesajian  may  simply  travel 
with  an  experienced  salesman  for  a  certain  period  of  time,   or  ho  may 
bo  trained  in  the  company's  course.      In  either  event,  he  represents 
an  investment  v;hich   is  lost  to  the  ccmpany  when  he   leaves  its  ert^loy. 

Furthermore  the  new  salesman  requires  more   supervision  than 


-4- 
-fche  more  experienced,   aad  thus   increases  sales  cosbs.     In  an  organi- 
zation 'vith  a  rapidly  changing  personnel    this  item  of   increased 
supervision  cost  becomes  of  considerable   importance. 

The  increased  supervision  cost  caused  by  a   rapidly  chang- 
ing sales  personnel   is  dwarfed,   however,   b^'•  the  cost  of  lost  business 
due  to  high  salesman  turnover.     A  eustomer  does  not  feel  confidence 
in  a   company  which  has  a  rapidly  changing  sales  personnel.      In  the 
customer's  eyes,   the   salesman  is  the   company.     If  the  company  changes 
representatives  often,   the  customer's  confidence  in  the  houso  and  his 
willingness  to  buy  c??.nnot  be  conserved  or  developed.     As  a   reiBult, 
business  is  lost  to  the  company. 

Hot  all  companies  lose  a  thousand  dollars  every  tine  a 
salesman  leaves.     For  most  companies  the   loss  may  be  conservatively 
placed  at  tv'o  hundred  dollars.     A  company  "which  has  a    sales  fcrco  of 
one  hundred  and  a  turnover  of  thirty  per  cent,  would  lose   six  thousand 
dollars  per  year  on  this  basis.     Such  a   sum  is  worth  saving,   and  a 
great  part  of   it  can  be   saved  by  reducing  turnover. 

Turnover  can  be  reduced  if  its  causes  are  known-  In  order 
to  discover  these  causes,  however,  sales  turnover  conditions  must  be 
studied  and  accurate  turnover  records  must  bo  maintained  for  regular 
analysis. 

THE  FACTS  OF  TURKOl^R 
How  Data  Were  Gathered. 

One  hundred  and  fifty  national  sales  organizations  were  ad- 
dressed by  the  Biireau  and  asbsd  to  cooperate  in  an  investigation  of 
salesman  turnover  by  furnishing  their  turnover  figvires.     These  organi- 
zations ^nere    selected  so  that  they  included  concerns  handling  many 
different  types  of  product. 


-5- 

For  the  convenience  of  the  companies  and  to  Insure 
uniformity  in  the  calculation  of  turnover   porcontages,   each  company 
■was  fxirnished  with  a  Sales  Turnover  B'la:ik,  a  copy  of  which  is   in- 
cluded in  this  report.     Annual   data  were  as]<-ed  for  covering  the 
period  from  January  1915  to  August  1922  and  full  directions  for  all 
calculations  were   included  on  the  blank. 
Results  of  Questionnaire 

Responses  wore  received  from   sixty-nine   of  the  one  hxindred 
and  fifty  companies  addressed  by  the  Bureau.     Of  these  sixty-nine 
companies  only  thirty-five  v^^ere  actually  able  to  furnish  turnover 
figures.     Several  other  companies,  thovigh  vmable  to  furnish  figures, 
estimated  general  turnover  conditions  within  their  org-inizations  and 
manifested   interest   in  the   investigation. 

An  analysis  of  the  responses   indicates  the  wide  variety  of 
concerns  addressed  by  the  Bureau  and  the   status  of  turnover  records 
among  sales  organizations  handling  various  types  of  products. 


TABLE  I 

ANALYSIS  OF  THE  RESPONSES  TO  THb'  BUREAU  QIESTIONKAIRE 

Number  of 

Number 

Type  of  Company 

Responses 
16 

FvT  n  i  s  hi  ng  F  i  gur e  s 

Office  Specialties 

10 

Automobiles 

7 

3 

Rubber  Products 

5 

1 

Life  Insurance^ 

4 

3 

Real  Estate,  Mortages, 

Stocks  &"Bonds 

3 

1 

Steel 

3 

0 

Clay  Products 

2 

2 

Heating  Equipment 

2 

2 

Commercial  Feeds 

1 

1 

Drugs  &  Drug  Store  Suppl: 

ies   2 

2 

Paint 

2 

0 

Electrical  Supplies 

1 

1 

Vacuum  Cleaners 

1 

1 

Electric  Lights 

1 

D 

SALES  TURNOVER  RECORD 
(Confidontial  laformEtion) 

COMPAKY DATE 

ADDRESS  OF  COMPAIIY  


Important:  Ploase  rood  directions  carefully  before  recording  data.  If  you 
cannot  supply  the  data  according  to  the  headings  given,  then 
fiirnish  turnover  figures  as  you  have  them,  explaining  how  the 
percentage  figvire  is  sooured. 


YEAR   : 

ATORAGE  mUEER  OH      : 
SALES  FORCE            : 

TOTAL  limiBER 
HIRED 

TOTAL  EXITS    •  ■ 

PER  CEIIT 
.      TURKOVKtt 

1915   : 

•1916 

•                                                . 

1917   : 

1918   ' 

■ 

1919   • 

1920   : 

1921  : 

1922 
to 

AuOTSC 

«                      .  _^ 

1 

DIRECTIOIIS :   (1)  The  "average  number  on  6%les  force"  for  any  year  may  be 

obtained  by  adding  the  number  on  the  payroll  at  the  begin- 
ning cf  each  nonth  rnd  dividing  by  12 . 

(2)  "''Total  number  hired"  means  the  entire  number  of  additions 
to  tha  sales  force  during  the  year  —  in  other  words,  the 
men  hirod. 

(3)  "Total  exits"  moans  tho  number  of  salesmen  "who  loft  tho 
company  during  tho  yoar  for  any  reason,  including  discharges. 

(4)  "Por  cent  turnovor"  is  tho  figure  obtained  by  dividing 
"total  exits"  by  "average  number  on  sales  force". 

(5)  When  tho  information  called  for  has  been  filled  in,  mail 
tho  blank  at  once  to: 

■   THE  BUREAU  OF  PSRSCIITIIEL  RESEARCH 

CARIEGIE  INSTITUTE  OF  TECHl^OLOOT 


PITTSBURGH,  BElfiJSYLVANIA. 


# 


Table  I  ((Ccartinaed) 

at 


jtyp^ 


ot    osrqssy 


3es-?ns-r  s 


Corlring  Utaasils 
Fil)re  BoKxd 
Food  BroduBts 
looriac  R-oteets 
loveltiss 

M^iBS  Honsa  Broducf 
SoKp 


B*B   Cl0thil« 


OU 


Sopplies 
Plate  GftBM 
Taps  ft  DIbs 


Brass  Fro^scte 


0 
0 

1 
1 
1 


1 
1 
1 
1 
o 
o 
o 
o 
o 
o 


In  aAslfeiOB  to  the  flgodres  fsvislBd  diroetlf  ^  tiiir^^ 
tlTs  coafianies,  data  were  reeeired  frca  tbe  t^i^TBMw^p^ 
IBfftitvte  and  the  Joaepk  ^idiarda  Coa^ry  '»iio  were  £lao 
iarasti^tica  of  Salsa  ?«m0rer.     Tbeir  d^ta  ecrscrsd  i3drty>-#iTe 
ecapacioe  aiKxis  ^^ich  vare  several  -::^idi  hsd  ftlrcadr  rapottod  tc  tlis 
■■reav* 
Be  liability  of  Pats. 

Statistics  ot  Marnprer  have  been,  in  ^na>«l«  aaBstis- 
faetcry.     tba  aaall  andier  of  coapanies  f^miiAin^  data  is  aiaian  is 
tlaa  freeeding  table.     Bvea  in  those  coapaaies  '•inure  emylctB  raeords 
are  kept,  the  preamce  of  a  lan^  naiber  of  -variables  avy  eawae  tlie 
sales  zsnsger  to  dexn^  that  a  hi^  turasrer  rate  has  ca^  eieaificaisce. 
Ihe  abnsmelity  of  the  tues  aid  the  aggresslre  tactics  sf  ssles 
Mana j^ers  in  "cleaaiag  taoaae*  faarve  caosed  a  hS^  tanc««r*    OBnr 
variables  affection  tvraonrer  src  ecapeasatisa.  the  liiMilai   cf  the 
liae,  tl»e  aetfaods  of  selection  and  training,  and  e-vesntte  sine  of  tlw 


-7- 

company.     These  variables,  however,  do  not  so  seriously  affect  the 
individual  turnover  ratios  as  to  pre\-ent  the   indication  of  the 
general  tend  of  turnover  or  the  relation  of  the  individual  turnover 
ratio  to  other  ratios. 

AKAiySIS  OF  CEHBRAL  TORI^OIER  COI33ITIOHS 
probably  the  best  index  of  general  sales  turnover  condi- 
tions is  the  average  yearly  percentage  of  txirnover  for  all   the 
companies  reporting.      In  Table   II,  the  year,  the  average  percentage 
of  turnover  for  that  year,  and  the  number  of  companies  reporting  for 
that  year  are   listed. 

tli/ff^     TABIE  II 

(SIIjEBAL  TURIiOVER  COIffiilTIONS  AS  SHOWII  BY 
A^^^GE  FERCEIJTAGE  OF  TURHOVE^ 

Mumber  of  Companies       Average  Percentage 
Yeay;  Reporting  of  Tnr never 

1915  12  41 

1916  16  49 

1917  20  45 

1918  24  51 
19X9  26  60 

1920  32  60 

1921  S3  77 

1922  35  85 

It  can  be   seen  that  during  the  period  from  1915  to  August 
1922,  there  has  been  a  gradual   increase   in  the  percentage  of  pales- 
man  turnover,  though  this  may  be  the  result  of  the  fact  previously 
mentioned,    -  that  the  nxanbcr  of  companies  keeping  turnover  records 
increased  with  each  year.      In  1915, only  twelve  of  the  thirty-fire 
companies  maintained  accurate   records.     From  then  on  there   is  a 
gradual   increase  'intil   in  1922  thirty-fivo  companies  "/ere  able  to 
supply  data. 


-8- 

The  general   increase   in  turnover    in  these  thirty-five 
companies  can  be   shown  to  better  advantage  by  the  use  of  a  chart* 
The  average  yearly  percentage  of  turnover  for  all  concerns  report- 
ing, compared  to  business  conditions  for  the  same  period,    is  pictured 
in  Chart  I.     Business  conditions  are  represented  by  Babson's  curve  of 
business  activity.     With  the  exception  of  the  year  1917,   the  increase 
in  turnover  is  gradual  from  year  to  year.     In  this  year  there  is  a 
slight  decrease   in  turnover  as  compared  to  the  preceding  year,  but 
still  an  increase   over  the  year  1915. 

On  first  thought,   it  seems  logical  that  the  curve 
representing  sales  turnover  conditions   should  be  the  reverse  of  that 
representing  business  activity.     As  business   improves,    it  would  seem 
that  the  turnover  among  sa  lesmen  should  grow  less  and  when  business 
is  retrogressing  turnover  should   increase.      In  timos  of  business 
activity  a   seller's  market  prevails,    sales  are  easily  made,  and  men 
of  lesser  ability  can  hold  their  jobs.      In  times  of  depression,  with 
sales  difficult  to  make,  the'se  poorer  men  are  dropped  and  swell  the 
turnover  percentages. 

Chart  I,   indicates  however,  that  for  the  period  vinder  con- 
sideration, turnover  conditions  in  sales  organizations  were  not  the 
reverse  of  business  conditions.     Despite  the  business  activity  of 
the  years  1915  to  1919   inclusive,   turnover  continued  to   increase. 
This  whole  period  was  abnormal,   perhaps,  due  to  war  conditions. 

One  company  reports  that  37  per  cent  of  the  salesmen  vrho 
left  their  employ  in  1917,   entered  military  service.     Another  company 
reported  that   19  per    cent  of  the   salesmen  employed  from  1914  to 
November   1918,   left  to  go  to  war. 


■■r/tf;n 


-Oaou  JIO 


i.  i' 


»€>*»* 


^a>-3j-»j 


'OJ»aA< 


-9- 

During  1919,  although  the  war  v/r,s  over  and  husiiiess  vms 
booming,   salesman  turnover   continued  to  increase.     The  demand  for 
salesmen  was  very  great  and  the  competition  bctveen  companies  for 
their  services  caused  then  to  jvanp  from  one  organization  to  another 
as  larger  compensation  was  offered.     For  this  reason,  largely,  turn- 
over continued  to  increase  despite  business  activity. 

Bineteen-tventy  and  1921  rrero  yoars  of  business  depression. 
During  this  period  salesman  tvirnover   increased  rapidly.     Sales  were 
difficult  to  make  and  those   salesmen  who  had  only  the  period  of  the 
war  as  z.'    Ijcckground  of  experience  covin  not  meot  tho  conditions 
that  existed.     Many  of  the  older   salesmen  who  had  become  spoiled  by 
the   "easy  sales"  of  tho  preceding  years  could  not  accustor.  them- 
selves to  the  now  state  of  affairs  and  were  dropped  also. 

The  largest  cut   in  sales  organizations  came  in  the  early 
part  of  1922.     At  the  beginning  of  the  year  most  sales  organizations 
adopted  an  aggressive  policy  and  djefinitely  "cleaned  house".     As  ona 
sales  manager  expressed  it  "We  will  continue  to  have  a^  large  turnover 
vmtil  we  have  built  up  otir  organization  to  one  thousand  salesmen  who 
will  be  hardboiled  and  -^reterans".     This  aggressive  policy  ie  reflected 
In  the  1922  figures. 

The  turnover  figures  for  the  first  part  of  1922  are  undoubt- 
edly higher  than  the  figures  for  the  entire  yaar  will  be.     Fron 
present  indications  it   seems  that  the  turnover  ratio  for  1922  will 
not  graatly  exceed  thit  of  1921  v'hile   the*  turnov-r  for   1?£5  -".ill  pro- 
bably be  much  loss.     In  other  -vords,  general  salesman  turnover  con- 
ditions are    improving. 


-10- 


COMFiiRISOK  OF  TURrO^/ES  AI'.IOFG  ORG;^ N IZATIONS 
HiV.iDLING  DIFFSREPT  PRODUCTS 

The  Rverage  t\a:nover  of  a  large  raunber  of  sales  orsani- 
zations  is  indicative  of  general  tendencies  in  salosjuan  turnover, 
but  of  little  value   in  considering  the  turr.cfror   In  ary  particular 
line  of  businoss.     Organizations  handling  sir.il?>.r  products  are 
affected  in  the   same  manner  by  general  conditions  and,   other  things 
bsing  equal,   should  tond  to  have  the  sano  percentage  of  sales  tvirn- 
over . 

T.ie  av3r"^ge   salceraan  tjrnover   in  -.   Ir.rgo   nunbcr   of  sales 
organizations,  affords  a  means  by  v;hich  sales  executives  may  chock 
up  their  orm  turnover.     If  the  turnover  for  any  one  company  groat ly 
exceeds  the  average  for  a  largo  number  of  organizations  handling  a 
similar  product,    bhe  causes  for  such  high  turnover  must  be  sought 
within  the  companv  itself. 

The  turnover   in  the  various  companies,   listed  eccording 
to  product  sold,    is  given  in  Table   III.     Such  ferf  companies  handling 
any  one  t^rpe  of  product  reported,  'ath  the  exception  of  office 
spocialties,  that  the   percentages,   althotigh  interesting,  do  not 
indicate   general  tendencies  in  these  types  of  aganizations. 


-11- 


TABLE  III 


PERCEKTAGE  OF  TIffiKCfVER  FOR  V.^RIOUS  TYIES  CF  COMPAHIBS 


«,^^_ — >— — «.„-^  __^.-__ 

'■   "T* 

''trp^  of  Product 

No.  of 

:       Handled 

Companies 

1915 

1916 

•1917 

:1918 

.1919 

:1920:" 

1921:' 

1922: 

Bo'>.l  Estate 

1 

333 

400 

275 

;  685 

425 

:   500: 

525: 

515: 

Oil  Corapany 

1 

232: 

108: 

Rub'jer  Products 

1 

:     60 

.     80 

50: 

170: 

189: 

Cindy 

1 

83: 

68: 

89: 

Roofing  Products 

1 

.     59: 

93: 

52: 

Automobiles 

3 

45. 

•     81 

■     57 

62 

.     56: 

69: 

111: 

Office  Specialties 

10 

15 

SC- 

30 

:     52 

60 

58: 

70: 

88: 

Soap 

1 

38" 

SI 

.     51 

:     47. 

69 

:     80: 

58: 

51: 

31oetrical  Supplies 

1 

•     38 

:     44 

60 

:     62- 

37 

57: 

57: 

47: 

Fncking  House  Products 

1 

:     48 

50: 

42: 

60: 

CoKimercial  Feed 

1 

22: 

39: 

53: 

Life  Insurarca 

3 

',     33 

67 

61 

:     34 

42 

.     38: 

35: 

40: 

Heatiiig  tquipnent 

2         : 

0- 

12 

25 

:     57- 

15 

17: 

27: 

41: 

Women's  Clothing 

1          : 

271 

16 

22- 

18 

11: 

31: 

50: 

tJovslties 

1 

is! 

21 

20 

.      18 

38 

9: 

17: 

33: 

Drugs 

2 

5 

10 

9 

12: 

20 

27: 

25: 

23: 

Clay  Products                    ! 

2 

0. 

0. 

17 

•     31: 

15 

18: 

22: 

35: 

Food  Products                   ! 

1 

44: 

43: 

40: 

Vacuum  Cleaners 

1 

166: 

230: 

Several  companies  estimated  their  turno-rer  figures.     These 
figures  are   shorm  in  Table  IV.     Estimated  figures  are,  as  a  rule,  too 
lovr  since   such  companies  tend  to  minimise  the   impor-csnce   of  turnorer. 
Such  estimates  are  presented  for  twenty-one  companies  representing 
fourteen  different  lines  of  business.       A   comparison  of  the  figures 
vrith  those  for  similar  lines  in  Table   III  shw?  that  the  estiiuates  are 
very  lo'.^s   on  the  averag:c.     Al•^ogotbor  the  figures  do  not  form  rv  basis 
for  reliable  conclusions. 


-12- 


TABLE  IV 


SSTDiATED  TU!?WC!7ER  W  FOURTEEN  LINES 


Per  Cent 

Type  of  Product                                 Turnover 

Poriod  Covered 

Storaso  Batteries                                   50 

Past  two  years 

M.:;chin^ry                                                     SO 

1921 

Aluminum  Goods                                           48 

Past  year  and  r.  hf.lf 

Ins\irance                                                     44 

1921 

Weighing  devices,   scales,  etc.         25 

Annual  figure 

Sashes  and  doore                                     25 

Annual  figure 

Electrical  appliances                           20 

Annual  figure 

Corsets                                                          15 

Annual  figure 

Hard-vare                                                     12'i- 

Annual  figure 

Slectrical  vehicles,  hoists,  etc.     10 

Annxial  figxire 

Metal  bods                                                     8 

Annual  figure 

Buttons                                                            5 

Annu?il  f  igtire 

Corrugated  Boxod                                   3  to  5 

Annual  figure 

Flour                                                    3  to  5 

Annual  figure 

COfcPARISQg  OF  TUHNOVEg  IN  OFHCE  SPECIALTY  0RG.M:IZATI0NS 

-^  wifa  tufjover  in  all  other  busii-esses 

Ten  office  specialty  organizations  furnished  their  turn- 
over data.     From  these  data  accurrto  concluBions  can  bo  drawia  as  to 
turnover  conditions  in  this  field.     Table  V  compares  the  annual 
average  percentage  of  turnover  for  office  epocialtics  vith  the  turn- 
over in  all  other   lines  represented  in  Table  III, 

TABLE  V. 

COMPARISON  OF  TUI^NOVER M  OFfflCE  SESCIILTY  3AL5S  ORGANIZATIONS 
TO  TURNOVER  IN  OTHER  SALES  Ot^GAivIZATIOWS 


Type 

•1915 

1916 

1917- 

1918 

1919 

.1920 

1921 

1922; 

Office  Specialty 

15 

30 

30   . 

52 

60   • 

58   : 

70 

88   : 

Other  businesses 

47 

54 

51 

t  51 

.  55 

61 

•   80 

.  83    : 

-13- 

This   snme   information  is  pictured   in  Ohart  II.     Durin^;  1915, 
1916,   and  1917,  turnover  ■'ms  considerably  higher   in  all  other  businssess 
than  in  office   specialty  organiznticns.      In  1918,  however,   turnover   in 
the  office  applicance  group  increased  considerably  and  fro-.Ti  then  on 
remained  as  high  or  higher  than  tho  turnover   in  other  businesses. 

During  the  period   of  prosperity   it   seems  evident  that  many 
companies  purchased  all  sorts  of   office  applionces,  vhereas  in  less 
prosperous  tines  they  ivould  not  hr.ve  done   so.     The  demand  for  office 
specialties  caused  expanded  sp.les  forces  as  vroll  as  expanded  mantxfactur- 
ing  facilities.     The  fact  that  e;:pansion  in  office  specialty  organi- 
zations was  much  more  rapid  than  in  organizations  handling  other  tj'pes 
of  products,   is  illustrated  in  Chart  III. 

The  chart  shows  the  expansion  of  office   specialty  sales 
organizations  and  all  other  organizations  in  terms  of  their  size  in 
1920.     The  year  1920  is  used  as  a  base  since   sane  of  the  companies  did 
not  report  figures  previous  to  this  time. 

Rapid  expansion  by  office  specialty  companies  naturally 
resulted  in  hi^  sslesman  ti'mcver.     Salesmen  were  scarce  and  many 
men  were  hired  who  could  not  become  salesrtien.     This  T/as  true  of 
organizations  selling  other  types  of  product  but  more  trxie  of  office 
specialty  organizations. 

Figures  for  individual  office  appliance  ccmpanies  fur.iish 
some  interesting  variations  from  the  general  averrges  f;iven  above. 
Such  figures  are  given  in  TablG  VI. 


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-14- 


TABLS  VI 


SALESmil  TURFO¥ER  IK  OFFICE  APPLI/iKCS   COKPAriES 


:       * 

:A7erase  for         : 

product 

1915 

1916 

1917 

■1918 

:1919 

•1920 

:1921 

1922 

•Period  of  Re  core":; 

Record  system 

3 

4 

6    • 

5 

7 

6 

8 

11, 

6.              : 

Record  System 

- 

- 

:      -   ; 

- 

110 

101 

130 

394 

184.            : 

Duplicating  machine 

-• 

- 

43 

107 

51 

34 

48 

53 

56.            : 

Duplicating  maohino 

.  27 

54 

24 

27 

88 

95 

112 

60 

60.            : 

Adding  &  Calculatiiig  Machine 

«- 

- 

-    : 

- 

- 

48    : 

62 

S3 

51.            : 

Adding  &  Calculating  Machine 

- 

- 

29    . 

21 

!  33 

36 

31 

37 

31.            : 

Adding  t  Calculating  Machine 

- 

- 

- 

81 

.   97 

87 

147 

128 

108.             : 

Adding  &  Calculating  Machine 

- 

- 

-   ■ 

- 

- 

94 

54 

:     80 

76.             : 

Filing  Equipment 

* 

52 

46    • 

68 

'   30 

21 

39 

40 

40.            : 

Cash  register 

— 

— 

— 

— 

" 

~ 

" 

32 

32.            : 

*Figvires  for   1922  are  on  a  yearly  basis. 


It  will  be  noted  that  thero   is  one    instance   of  a  V3iy  lev  annual 
turnover.     With  this  exception  no  one   of  the  ten  companies  reported 
a  turnover  of  less  than  20  per  cent  for  any  year  since  1915   (  or 
since  records  have  been  kept.)     In  fact,  when  the  averages  for  the 
entire   period  are  taken,   the  figures,  •vith  this  sans  single  ©jcception, 
are  all  above  30  per   cent.     From  this  point  they  range  all  the  "^ay  to 
184  per  cent, 

THE  IBED  FOR  ESTTSR  TURNQVBR  DATA 
Insufficiencies  of  present  Data  ^^^^t**'*^:!^^^'^ 

Many  sales  organizations  maintain  no  records  of  turnover. 
Twenty-nine  companies  addressed  by  the  Bureau  wei-e  unable  to  furnish 
turnover  data  for  various  reasons.     An  analysis  of  ttese  reasons 
discloses  the  fact  thrt  nost  of  these   companies  have  no  records  of 
turnover,   or  their  records   are   unavailable. 

"Our   sales  force   is  too  small"   or  "Our  turnover  is  ne3!;:is,iblo" 
•were  the  reasons  advanced  trr   six  companies  for  not  fvurnishinj:  ttornover 


-15- 

data.     Ton  companies  rsported  th5t  they  kept  no  records  at  all  or 
that  their  records  were  not  in  the  proper  forni.     Three  other 
companies,   although  keeping  records,  found  that  the  d^ta  woro  so 
scattered  that  their  compilation  ivould   involve  considerable  clerical 
work.      In  other  words,   nineteen  of  the  twenty-nine   companies  eithar 
have  no  records  at  all,   or  their  records   are  for  most  purposes  un- 
available.    It  is  also  very  likely  thrt  a  large  nvanber  of  the 
companies  which  did  not  reply  to  the  Bureau's  request  for  information 
failed  to  do  so  because  they  had  no  records. 

Many  companies,  although  keeping  turnover  records,  get 
little  benefit  from  them.     In  most   such  cases  the  records  are  not 
easily  available.     One  company  reported  that  as  soon  as  their  pay- 
roll clerk  gathered  the  figures  on  turnover,  they  would  forward 
these  figures.     This  company  thought  that  it  was  keeping  turnover 
records  but  actually  it  was  not.     The  payroll  clerk  had  probably 
. seldom,   if  ever/  been  asked  to  compile  the   information  from  the  pay- 
roll for  the  benefit  of  the  sales  executive.     The   information  was 
all  there  but  probably  was  never  used. 

Turnover  records  which  are  merely  kept  and  are  not  analyzed 
are  of  little  value.  Companies  are  rare,  however,  who  analyze  their 
records  and  really  attempt  to  deternine  what  is  causing  turnover.  A 
few  of  the  companies  submitting  data  to  the  Bureau  included  analyses 
of  a  more  or  less  general  nature.  A  consideration  of  these  analyses 
will  be  interesting. 

In^fi  single  year  one  company  lost  forty  men.     Eighteen  of 
these  men  had  a   service  record  of   less  than  one  year,  r/hile  fr-venty- 
two  h?id  served  more  than  a  year  v/ith  the  company.     The  reasons  given 
for  dropping  these  men  were: 


-16- 


Laclc  of  character    ••* 7  men 

Lack  of  ability    22  men 

Lack  of  industry   4  men 

Lock  of  courage »  1  man 

Lack  of  persona lity  2  men 

Unavoidable  4  men 


Of  fiftj'  inen  hired  in  one  year  by  a  certain  company, 
t^A'anty  failed.     The  reasons  for  their  failure,   as  given  by  the 

company,  vere: 

Lack  of    industry 9  men 

Failure  to  folloiv  instructions  1  man 

Lack  of  tact    2  men 

Lack  of  stick-to-ititeness   ...  2  men 

Lack  of  confidence  in  closing.  1  man 

Lack  of  knowledge  of  line   ....  2  men 
Uhable  to  withstand  counter 

offense  s 2  men 

Dishonesty   1  man 

Another  company  hired  118  men  fron  1914  to  1918.    V^hat 
happened  to  those  men  during:  this  period  is   shc/m  below: 


IS^  entered  the  war. 

1^  vere   lot  out  as   incompetent. 

19J?  quit  of   their  ovm  accord   (some 

would  have  been  let  out). 
4:4:%  remained  v/ith  the  company. 


These  amlyses  all   indicate   the  reasons  for  '..hich  the 
company  dropped  certain  men,  but  they  do   not  indicate  the  roascais 
for  which  men  voluntarily  loft  the   company  -  that  is  reasons  for 
salesman  turnover  -vrhich  ere  chargeable   to  the  company  -  though  such 
reasons  are  probably  more    important  than  the   others. 

LIMITATIONS  ON  VALUE  OF  TURIIO^gER  DATA 

To  truly  interpret  turnover  data  the  policies  of  a  compare 
and  the  conditions  of  business  at  the  time  must  be  considered.     Turn- 
over data    is  limited  by  both  of  thcso  considerations. 


n- 


The  compensation  schcsio  omployod  by  a  ccnpany  has  a  markod 
effsct  upon  the  turnover  of    sa loGmon.      In  trncs  of  poor  business, 
the  commissions  earned  from  a  fe*7  sales  sre,    in  most  cases,   insuffi- 
cient to   support  a    salesmnn.     The  rats   of  commission  per  srilc   is 
usually  set   so  that   in  -.-ormal  times  the   salesman  earns  a  fair  wage, 
hut  it   is  not  a  measure  of  the  vsluc  of  the   sale  to  the  organization. 
Therefore  in  times  of  depression  tha   salesr.an  on  a   comrdssion  basis 
is  not  receiving  the  revard  his  services  justify.     Ho  becomes  dissati- 
sfied leaves  the   company. 

A  straight   salary  for  salesmen  often  decreases  turnover. 
One  sales  .:iamger  recommends  a  combination  of  the  commission  and 
straighb  salar"  plan.     He  uses  a  commission  basis  -rith  a  drawiiig 
account.     By  using  such  a   scheme  he  feels  that  the  high  turnover 
common  to  the  commission  scheme  of  compensation  can  easily  be  halved. 

Companies  employing  a  "hit  or  miss"   scheme  of   selecting 
salesmen  are  certain  to  have  a  higher  percentage  cf  turnover  than  a 
company  using  very  careful  scientific  methods.     The  effect  of  poor 
selection  upon  turnover  is   illustrated  by  results  in  a  lithographing 
company  v*iich  maintains  a  training  course  for  its  salesmen.     Out  of 
every  six  men  "arhom  the^f  select  and  train  only  one  man  actually  makes 
good. 

Insviffioient  training  and  supervision  of   salesmen  are 
probably  as  much  to  blame  as  poor  selection  for  causing  high  turnover, 
neither  training  nor   supervision  has  been  developed  in  terms  of  the 
actual  elements  of  the  salesman's  job.     He  does  jiot,  therefore,  as  a 
rule  receive  specific  help  in  the  things  -"-vhich  are  most  difficult  for 
him  to  do.     Then  again,  the  salesrKin  is  often  turned  loose  on  his  orm 
resources  too    soon.     He  does  not  have  the  necessary  coiofidence   in  him- 


-XC- 

self  and,  as  a   result,   lie  fails. 

Adverse  business  conditions,  of  coiorse,   limit  the  value  of 
turnover  data.     Increasing  turnover   naturally  occurs  in  times  of 
business  depression,  and  is  to  be  expected.     However,   since  it  is  to 
be  ej:peoted,  an  Increase  in  turnover  which  is  really  too  large  is 
often  disregarded, 

WHAT  TIJHTOTER  BECQHDS  SHODLD  BE  KEPT? 

Every  sales  organizati6n  should  keep  a   record  of   its  turn- 
over.    This  record  should  be  kept  on  a    separate  form  provided  for  the 
purpose.     It  is  then  always  available  for  reference  and  the  trend  of 
turnover  is  always  kno'm.     A  mere  record  of  exits  indicated  upon  the 
payroll  is  not  sufficient  as  it  is  not  easily     available. 

A  simple  form  for  recording  and  analyzing  turnover  data 
was  devised  in  1918  by  the  Bureau  of  Personnel  Research,   (at  that  time 
the  Bureau  of  Salesmanship  Research.)  for   its  cooperating  companies, 
and  has  been  successfully  and  profitably  used  by  many  of  them.     A  copy 
of  this  blank  is  included  in  this  report. 

Another  type  of  turnover  record  is  illustrated  by  the 
Termination  Record  shown.     This  form  was  devised  by  the  Life  Insurance 
Sales  Research  Bureau  of  Carnegie  Institute  of  Technology  for  its 
thirty-seven  cooperating  companies.     With  such  a  method  of  analysis,  a 
company  can  determine  very  accurately  the  real  facts  about  turnover. 

VALUE  OF  PROPER  RECORDS 

The  value  of  proper  records  lies  in  the  fact  that   sucli 
records  make  reduction  of  turnover  possible   'uy   indicating  its  eauses. 
If  the  turnover  records  of  a  company  show  that  a   large  part  of  the 
s'ilesmen  leaving  the  organization  are   leaving  because  of  the 


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Copyright  1922  . '•.  ;  -t  l."'". 

Life  Insurance  Sales  Research  Bureau 
Form   1-40     2M-5-22 

- Life  Insurance  Co.  General  Agent  Reporting 

TERMINATION  RECORD 

(To  be  filled  out  for  each  agent  leaving  the  company) 

Agent's  Name ^ull  Time  (     )  Agency 

Part  Time  (     ) 

Date  of  Contract _ Date  of  Termination 

Agent's  paid-for  premiums  during  each  of  his  last  six  months: 

1st  month  $ _ 2nd  month  $ 3rd  month  $ _...._ 

4th  month  $ _.    5th  month  $ _ 6th  month  (last)  $ 

Was  agent  entirely  financed  by  General  Agent  (     )  partially  financed  (     )  or  paid  commission  only  ( 

Territory Was  it  city  (     )  country  (     )  or  small  town  ( 

1.  Did  agent  resign  voluntarily  (     )  or  at  request  of  General  Agent  (     )  ? 

2.  Was  agent  earning  a  living  at  selling  life  insurance  ?    Yes  (     )     No  (     ) . 

3.  Was  termination  caused  by  death,  old  age,  ill  health,  marriage,  or  removal  from  locality?      Yes   ( 
No  (     ) .    If  yes,  which  ? 

4.  Was  agent  undesirable  for  such  reasons  as:    financial  irregularity,  conduct,  disloyalty,  or  other  w 
ness  of  character?    Yes  (     ).    No  (     ).    If  yes,  which? 

5.  Was  he  a  graduate  of  any  training  course  in  life  insurance  ?    Yes  (     ) .    No.  (     ) .    If  so,  which  ?... 

6.  On  the  average,  how  many  hours  per  day  did  agent  work  at  soliciting  ? 

7.  On  the  average,  how  many  interviews  per  day  did  he  have? _ 

8.  How  many  times  during  his  last  two  months  of  active  work  did  you  or  other  agents  accompany  hii 
soliciting? days. 

9.  Was  agent  assigned  to  anyone  for  joint  work  or  supervision?     Yes  (     ).     No  (     ).     If  so,  to  wh 

10.  Is  agent  indebted?    Yes  (  ).     No.  (  ).     If  so,  for  how  much ?    $ _ 

11.  What  is  his  general  financial  condition?    Serious  debts  (     );  slightly  in  debt  (     );  just  clear  (     );i 
erate  (     ) ;  well  fixed  (     ) . 

12.  Has  all  outstanding  business  been  settled,  so  that  bond  can  be  cancelled?    Yes  (     ) ;  No  (     ). 
18.     State  the  line  of  work  he  has  taken  up : 

Former  occupation,  namely _ 

New  occupation,   namely „ _ 

Agent  for  another  life  company,  namely 

'  General  agent  or  manager  for  another  life  company,  namely 

14.     Is  cancellation  of  agent's  license  recommended?    Yes  (       ).    No  (     ). 

(OVER) 


Analysis  of  Termination  Causes 

Indicate  your  answer  to  each  question  below  by  making  a  cross  (X)  on  the  line  just 
re  you  think  it  ought  to  be.  For  example:  in  question  1,  if  the  agent's  appearance  did  not 
2  justify  a  cross  at  "Created  fine  impression",  but  was  a  little  better  than  would  be  in- 
ted  by  "Good  appearance",  put  the  cross  on  the  line  somewhere  between  these  two  places. 


How  were  prospects  im- 
pressed by  agent's  appear- 
ance (as  shown  by  facial 
expression,  physique,  neat- 
ness and  manners)  ? 


Created  fine 
impression 


Made  a 

good 

appearance 


Often  made  an 

Made  a 

unfavorable 

poor 

impression 

appearance 

Did  agent  impress 
prospects  by  his 
sincerity? 


Left  distrust 
as  to  his 
sincerity 


Seemed  to 
exaggerate 


Usually 
created 
confidence 


All  he  said 
was  taken  at 
face  value 


What  was  agent's  attitude 
towards  supervision  or 
suggestions? 


Sought  for 
suggestions 
and  help 


Welcomed 
suggestions 
when  offered 


Indifferent 

to 

suggestions 


Objected  to 
supervision 


How  successful  was  he  in 
locating  prospects?  Did 
he  strike  out  for  himself? 


Waited  to  be 
directed.     Had 
to  be  told. 


Often  ran 
short  of 
leads 


Usually  well 
supplied  with 
prospects 


Had  exceptional 
"nose"  for 
prospects 


To  what  extent  did  he  plan 
his  interviews  and  study 
his  prospects  ? 


Made  careful 
preparation 


Used  information 
readily  available 


Made  slight 
preparation 


Interviewed 

without 

preparation 


How  well  did  he  know 
life  insurance? 


Had  thorough 
knowledge 


Quite  well 
informed 


Often  relied 
on  manuals 
or  rate  book 


Had  scant 
information. 
Made  blunders 


How  did  he  like 
meeting  and  persuading 
people  ? 


Strong  dislike 
for  soliciting 


Showed 

some 

aversion 


Took  it  as 
a  matter  of 
course 


Enjoyed 
soliciting 


To  what  extent  was  he 
sold  on  life  insurance  as 
a  profession? 


Never  really 
believed  in 
profession 


Some 
faith  in 
profession 


Thought  well  of 
profession 


Was  sold 
100  per  cent 
on  profession 


How  hard  did  he  work 
at  selling  life 
insurance  ?  , 


Loafed  on 
the  job 


Tended  to 
take  things 
rather  easy 


Worked 
systematically 


Was  a 
consistent, 
hard  worker 


What  was  the  attitude 
of  agent's  wife  or 

family  ? 


Enthusiastic 


Favorable 


Did  not  en- 
courage or 
cooperate 


Antagonistic 


-13- 

coiiipons3tion  plan,  turno^/er  can  be  reduced  by  charging  the   schema 
of  compensation  to  one  better  suited  to  the   sittiation. 

If  many  salesmen  are  failing  because  they  ^re  not  aggressive, 
persistent,   and  forcible,    or  because  they  have   not  the  proper 
personality,   poor   selection  methods  pre  being  used.     More  careful 
attention  to  the   selection  of   salesmen   in  a  case  like  this  will 
certainly  reduce   the  turnover . 

Whatever  the  cause  of  turnover,    if  proper  records  are  kept 
and  analyzed,  this  csuse  mil  be  disclosed.     Once  disclosed,   it  may 
be  eliminated  nnd  turnover  automatically  reduced. 

The  reduction  of    sales  expense    is  an  objective  "^hich  sales 
executives  are  constantly  striving  to  reach.     Serious   study  of  the 
facts  of    salesman  turnover  mil  reveal  one   important   line  along  which 
real  advances  tc.vard  thst  objective  can  be  made. 


LOAN  DEPT. 

or  on  the  date  to  wmcn  j^q. 


-5^^'//^ 


J-  3 


I 


■  ^S^.T^., 


2^3 


^orm  Mo 


94720 


